Why supermarket shelves are still empty

Panic buying has eased, and supermarkets have imposed limits on products to prevent stockpiling. So why are some supermarkets still missing everyday items?

Coles chief operating officer Matt Swindells told Channel 7’s Sunrise it takes time for shelves to recover from a buying frenzy.

“You get this large surge in demand some seven weeks ago, and that has to ripple its way back up the supply chain, all the way through transport, the retailer’s warehouse, the supplier’s warehouse, the suppliers factory and even into the supplier’s raw material and ingredient providers.”

In a country Australia’s size, that takes time, he said.

Restrictions are coming off various products, with toilet paper expected to be replenished shortly. But the example of flour shortages helps explain the power of the “ripple effect” in supply chains.

Mr Swindells said more people are baking at home during the coronavirus self-isolation, increasing demand for cake mixes and flour.

“And flour has to be manufactured and transported and distributed and stacked… Again, we’re working as hard as possible but in some of those categories where we have high demand… it’s a big challenge …”

Such surges in demand cause the “bullwhip effect”, says Manoj Dora, Reader – Operations Management at Brunel University London.

“These irregular orders in the downstream of the supply chain (the shops) have a knock-on effect upstream of the supply chain (storage facilities and suppliers).”

Workers scramble to meet demand and by the time the items appear “demand is down because people have already stockpiled”.

“The majority of supermarkets operate using a ‘just-in-time’ approach to deliveries. This means they have a constant carousel of stock being delivered and put on shelves, to be sold the next day, based on sophisticated models of what people normally buy.

“They do not carry excess stock because it is cheaper to store it in big out-of-town warehouses with lower rents.”

When a pandemic causes a surge in demand for particular items, supermarkets can’t restock quickly enough and orders are spread across many stores.

“In other words, and on many occasions, supermarkets do actually have products in their storerooms, but they do not have enough staff to bring it to the shelves as fast as they are taken from them,” says Jose Arturo Garza-Reyes, head of the Centre for Supply Chain Improvement at the University of Derby.

Food supply chain experts insist their systems are geared for natural disasters, such as hurricanes, another occasion when consumers stockpile, and they are resilient and adaptable. There are no shortages of essentials, with most supermarket supply chains – grocery stores, food-service distribution centres, regional distribution centres and manufacturing facilities – collectively holding up to four months’ worth of food.

It’s just that prolonged demand for specific items brings unique pressures.

Human psychology is one of the factors. Academics have found that consumers “compensate for a perceived loss of control by buying products designed to fill a basic need, solve a problem or accomplish a task”.

“This is what we’re seeing as people rush to buy rice, cleaning products and paper goods in illogically large proportions,” wrote Andy J. Yap, Assistant Professor of Organisational Behaviour, INSEAD graduate business school.

Manoj Dora simply points out that “the panic buying of essentials such as pasta, rice, tinned food and toilet rolls causes a domino effect that makes others feel compelled to stock up themselves. This is not only unnecessary; it makes the problem worse for everyone …”

This means stores that offered thousands of items suddenly face massive demand for a handful.

The next problem is that supply chains in the west are geared towards supplying restaurants as well as stores. “Food services may have represented 50 per cent, now they represent about 10 per cent,” says Fred Boehler, CEO of US-based supply chain firm Americold Logistics.

Orders have suddenly lurched toward retail and most of the food provided for restaurants in bulk must now be supplied in much smaller packaging for home consumers.

Then there are precautions necessary to safeguard workers slowing down procedures.

All over the world, grocery stores are gradually overcoming the initial shock of panic buying.

“That food supply chain is continuing to operate. You’re not hearing of people starving in Italy,” says Lowell Randel, vice-president of the Global Cold Chain Alliance (GCCA) in the US. “Grocery stores have remained open and food is available.”

So, what do the experts say a humble consumer should do?

Carry on and shop calmly, says Caitlin Welsh, director for the Global Food Security Program at the Centre for Strategic and International Studies in the US.

“People should take a deep breath, and shop for one to two weeks maximum,” she told the BBC. “If you don’t find what you need, come back tomorrow.”

Are you finding what you need at your supermarket?

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Written by Will Brodie


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